MediPharm Labs Corp. (TSXV: LABS)(OTC: MEDIF) has agreed to a multi-year supply deal with Cronos Group Inc. (NASDAQ: CRON).
What To Know
Per the deal, MediPharm will supply Cronos Group's wholly-owned subsidiary, Peace Naturals Project Inc., with roughly $30 million in cannabis concentrate over 18 months. These figures could jump to $60 million over 24 months, subject to certain renewal and purchase options.
Under a separate two-year tolling agreement, Cronos selected MediPharm’s Barrie, Ontario extraction facility as its preferred partner for particular processing needs. Peace Naturals will supply bulk dried cannabis to MediPharm for processing bulk resin and other cannabis derivatives which will be sold under the Cronos brand.
Why It's Important
“With the continued evolution of the Canadian cannabis industry, we are excited to partner with Cronos Group in their journey to launch new products and secure MediPharm Labs’ high-quality private label supply of concentrates,†Patrick McCutcheon, CEO MediPharm Labs said in the press release. “We look forward to supporting the team at Cronos Group with our specialized extraction capabilities and expertise to address a rapidly expanding cannabis market and growing consumer demand.â€
“As the industry develops and matures, we see opportunity to work with companies like MediPharm Labs that provide specialized, high-quality services and inputs for our products,†said Mike Gorenstein, CEO of Cronos Group. “Along with our internal capabilities, we are pleased to be working with MediPharm Labs to bring great products to consumers in anticipation of the derivative market launching in Canada this fall.â€
Cronos Group's stock traded higher by 6.7 percent at $15.21 per share Tuesday morning.
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